Charity sector grows but competes for dwindling donations

By Alana Schetzer

Updated25 January 2016 — 4:43pmfirst published at 1:03pm

More than 200 new charities were registered every month last year, despite widespread concern that there are already too many charities competing for dwindling donations, which have fallen to their lowest levels in 30 years in real-dollar terms.

More than 2500 new charities were created last year and registered with the Australian Charities and Not-for-profits Commission, on top of the 53,000 already established charities.

There are more charities competing for diminishing donations.

Photo: iStock

There are also about 600,000 not-for-profit groups operating across the country.

ACNC assistant commissioner Murray Baird told the Governance Institute of Australia's Contemporary Governance Conference late last year that there was a danger of too many duplications but stepped away from forcing charities to merge or close.

Advertisement

"We've found ourselves in the midst of some conversation as to whether there are too many charities and whether we should stand at the gateway to stop them coming in, and/or whether we should be encouraging mergers and other collaborative arrangements," he said.

An ACNC spokeswoman told Fairfax Media that there is no cap on how many charities can be established but that it does advise would-be new charities to consider whether another charity is already is doing what they aim to achieve.

"While the ACNC does not actively encourage charities to merge, we do advise those wishing to start new charities to research existing charities before registering a new entity," she said.

"The ACNC advises people to ask themselves if starting a new charity is the best way to achieve their goals as there may be an existing charity or not-for-profit that already does what they want to do."

There has already been a push for some charities to close or merge due to duplications in recent months, with one of the industry's peak body calling on charities to aim to focus on "achieving benefits to communities" rather than growing their organisation.

Community Council of Australia chief executive David Crosbie told Fairfax Media in December that with government revenue shrinking and fewer Australians giving to charity, there was a "squeeze" on the charity sector and it needed to think creatively.

"That trend is actually quite dangerous for the sector," Mr Crosbie said, adding that there was increasing competition for limited funds and contract work.

Research conducted by wealth advisory business Koda Capital last year revealed that donations across Australia grew just 0.58 per cent, at the same time when other economic indicators, such as the consumer price index and gross domestic product, were much higher.

Compared to the growth in CPI (up 2.4 per cent) and ASX all-ordinary stock price index (15.5 per cent), the rate of donations actually went backwards.

The 2015 giving review revealed that current donation rates have plummeted to levels not seen since 1985-86, taking into account inflation.

The charity and not-for-profit industry is worth about $103 billion annually and employs about 9.7 per cent of Australian workers.

According to the ACNC's charity register, the most common type of charities are religions (30 per cent), followed by education and research (18 per cent), health (9 per cent) and development and housing (8 per cent).